Introduction
Economics is a term which lies in almost every walk of life and it is a term which is quite important from different standpoints. The term of economics has been utilized and discussed entirely through different provisions in total. There is no single definition of the term ‘Economics’ exist in this world, because every author has been discussing the same in a somewhat different manner in total.
Adam Smith and Alfred Marshal are known as the founder of Economics (FOE), found that economics is the study of wealth and the concept of the same should have been categorized into different provisions as well. The concept of Economics lies in the fact that how effectively an individual or a company analyzes the power from different provisions (Mankiw, p.96). There are two different parts of economics, which predominantly are microeconomics and macroeconomics. In microeconomics, the economics related to the individual would be assessed while macroeconomics would deal with the economics of the country as a whole. The main perspective of this assignment is to define some terms of economics, including its critical analysis.
Deficit:
When the expenditures are becoming higher than company’s earnings or in another way, if expenses costs get surpass from the amount of revenue, then the exceed amount is termed as a deficit. It can also be measured by observing the disparity among cash flows values such as cash inflows and cash outflows. It is generally prefixed by another term that refers to a particular stance - the trade deficit or deficit, for example. The deficit is the opposite of "excess" synonymous with shortages or loss. For instance, if an individual or corporate made export of $4 billion and their net imports would be worth $6 billion then the difference of $2 billion would be considered as deficit amount. In most of the cases, the huge amount of deficit by having growing frequency is not in favor or unsustainable, regardless of whether the deficit amount is encountered by individuals, companies or governments (Mankiw, p.159). After a few years of huge deficits can destroy an individual or company's shareholders' equity, and ultimately bankruptcy, the only option left behind. Although, the sovereign governments have greater ability to maintain the deficit amount, however, negative impacts of deficit may involve couple of cases such as lower the economic growth (in the case of budget deficits), or on the value of their currency collapse (in the case of trade deficit).
Critical Analysis over Deficit
Deficit, regardless with their type could be extremely dangerous for an economy or for a country in total because deficit represents that a shortfall in the actual or in the forecasted material. This particular element should be taken into account considerably by a country or by the economist of a country to analyze that how much deficit is coming. High deficit is never meant that a country is economically weak, but it is a sign that the company has high amount of legal obligations which should be placed at a lower place for a company.
Fiscal policy:
Fiscal policy generally refers to the policies of administration policies which build an impact over macroeconomic provisions. Through fiscal policy, regulatory agencies attempt to improve the unemployment rate to control inflation, stabilize the business cycle and the impact of interest rates in an effort to manage the economy. Fiscal policy is mainly based on the ideas proposed by John Maynard Keynes who was the British economist; the ideas believe in the fact reflect that the government may change the tax rates and government spending by adjusting the economic performance of ideas. Government may lower taxes, trying to stimulate economic growth. If people would not pay taxes according to the standard, then they would be having the opportunity to spend and invest in more money. Increased consumer spending or investment, can improve economic growth. Regulators do not want to see spending increased, but too much, because it may increase inflation (Mankiw, p.211). Fiscal policy is one of many problems; it has often disproportionately affected specific groups. Fiscal policy and monetary policy are the two main driving forces which persuade the country's economic performance. A country's central bank through monetary policy can influence the money supply. The regulator uses two attempts to stimulate the sluggish economic policies to maintain strong economic or cool an impassioned economy.
Critical Analysis over Fiscal Policy
There are number of laws and regulations, along with models have been associated with the field of economics, and among these things, the name of fiscal policy is one of them. There are number of authors who have had clear distinct and criticism of the application of fiscal policy. Authors like Philip Kotler and Samuelsson, Fiscal Policy is nothing and it doesn’t give a great idea regarding the financial and strategic position of a company as a whole, hence this particular thing could not be taken into account for any purpose.
According to these authors, economic indicators are extremely essential to assess the level of economic prosperity and economic health of an organization, but having an effective fiscal policy doesn’t mean that an economy is strong. Yes it is demonstrated that the country could get the added advantage by gaining attention from their citizens as far as collection the taxes and other important element is concerned, but analyzing the financial and strategic position of the company on the behalf of only this particular thing is not at all right and it needed to be enhanced a bit further. This criticism doesn’t mean that having a greater fiscal policy doesn’t help out a country to increase its financial or economic competitiveness, but having an effective fiscal policy is a medium that from which foreign companies and foreigners are becoming able to invest in a certain country with full efficacy.
Debt:
Debt can also be termed as liability which an obligation is given by the debtor as the first party to the creditor the second party, which usually refers to the debtor by the creditor granted assets, but the term can also be used as metaphorically in order to cover up the moral obligations and other interactions based on the economic value. Most specifically, the amount acquires by one party from another. Many businesses or single ones use debt process to made bulk purchases which they are unable to execute under normal economic conditions. Debt arrangement to the borrower to borrow money in the case, it is to be paid at a later date; usually the permissions are involved in it. The debt may be in the form of bonds, credits as well as commercial papers (Mankiw, p.550). In order to granter loan by creditor to borrowers, both of the parties must have to be agreed under standard criteria named “deferred payment” manner to pay off the debt on certain time period. Expected to repay is the basis to approve the request of debt that usually granted in modern society, in most cases, this includes the original amount of the repayments with proper interest ratio.
Critical Analysis over Debt
Debt is something which is not at all preferable from the viewpoint of an organization as well as from a country as well. High amount of debt always bring a sort of change mindset that the financial position of a country is not effective, hence they should require effective strategies to overcome the same with perfection.
Conclusion
Economics is the name of how to earn the money and how to consume it. Unfortunately, there is no single definition of the term “Economics” exist. Adam Smith and Alfred Marshall were the one who presented the most basic and widely used definition of the term. According to them “Economics is the study of wealth” and everything relates to that would be counted among different provisions of the same.
There are numerous concepts that come under the umbrella of economics, as this is the only subject which has its recognition in almost every walk of life both in long and short term analysis . From the entire analysis it is found that all of these concepts are perfect and analyzed thoroughly from different viewpoints.
Work cited
Mankiw, N. Gregory. Principles of Economics (Mankiw). Chicago: Cengage Learning, 2011.
